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TransPerfect Co-CEO Sanctioned for Bad-Faith Acts

July 20 — The co-owner of TransPerfect Global Inc., a New York-based translation company being
sold due to irreconcilable management conflicts, must
pay his co-founder's legal fees because his “unusually deplorable behavior”
during litigation “obstructed discovery, concealed the truth, and impeded the administration
of justice” (
Shawe v. Elting
, 2016 BL 232452, Del. Ch., No. 9661-CB, 7/20/16
).

Chancellor Andre Bouchard of the Delaware Chancery Court July 20 ordered Philip R.
Shawe, TransPerfect's co-founder and co-chief executive officer, to pay the legal
fees accrued by co-CEO Elizabeth Elting in a trial and a sanctions hearing earlier
this year.

Shawe told Bloomberg BNA that he will appeal the decision. Bouchard “again decided
against the weight of actual witness testimony and genuine evidence and relied solely
on the statements of Elting's attorneys,” he said in a July 20 e-mail.

“TransPerfect has never been either dysfunctional nor faced with irreparable harm
as Bouchard ruled,” Shawe added. “I am beyond confident that both I and TransPerfect
will be completely vindicated on appeal.”

The July 20 ruling is the latest in a series of lawsuits the co-owners have filed
against each other as they vie for company control. In August 2015, the court appointed
a custodian to sell TransPerfect because Shawe and Elting's conflicts threatened the
well-being of the company. The court affirmed a plan of sale June 20 (119 CARE, 6/21/16).

The pending sale sparked a backlash among a group of TransPerfect employees, who are
now pushing to change Delaware law to prevent the court from ordering such sales in
the future (134 CARE, 7/13/16) (128 CARE, 7/5/16).

Request for Sanctions

The court issued its July 20 decision in response to a motion for sanctions that Elting
filed against Shawe after an evidentiary hearing held in January. At the hearing,
Elting alleged that during their litigation, Shawe deleted files from his laptop computer,
failed to safeguard evidence on his phone, and repeatedly lied under oath to cover
up his actions.

Shawe “needlessly complicated and protracted these proceedings to Elting's prejudice,
all while wasting scarce resources of the Court,” Bouchard wrote in his 58-page opinion.

According to the opinion, Shawe's “unusually deplorable behavior” began in 2013, after
conflicts between the co-owners led Elting to hire a lawyer. Shawe broke into Elting's
office and tampered with her computer, extracting e-mails off her hard drive without
her permission. He found a way to access her computer remotely, and between March
and July 2014 accessed Elting's computer at least 44 times. In all, Shawe gained access
to thousands of Elting's private e-mails, including 12,000 private conversations with
her lawyers, the opinion said.

Shawe also destroyed evidence on his laptop even though the court ordered documents
to be preserved in anticipation of the trial, the opinion said. It added that an iPhone
of Shawe's that might have had more evidence inexplicably went missing. When asked
about all these things, Shawe repeatedly lied to the court.

Shawe will pay 33 percent of Elting's attorneys' fees and expenses surrounding the
trial and all of her attorneys' fees for the sanctions hearing, Bouchard wrote. The
judge also directed Elting to file an order within 10 days stating the amount of reasonable
attorneys' fees and expenses she incurred.

To contact the reporter on this story: Leslie A. Pappas in Philadelphia at
lpappas@bna.com

To contact the editor responsible for this story:
Yin Wilczek at
ywilczek@bna.com

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